Latest market data

Stock search

It took eight months and dozens of prototypes before Bayard
Winthrop, CEO of online apparel company American Giant, settled
on the design for the ultimate hooded sweatshirt. He started from
scratch, hiring creative director Philipe Manoux, a former
industrial engineer at Apple, and world-renowned pattern-design
engineer Steve Mootoo to rethink every aspect of the
traditionally bland wardrobe staple.

A partial list of enhancements: reinforced elbow pads; a
double-lined hood; custom hardware; a carefully calculated
spandex percentage woven into the cuffs and waist to hold shape
and elasticity; a "dry hand" feel, achievable when premium cotton
fabric has been napped, or run through machines that pick out
tiny loops of thread to give it extra softness and lift; and most
noticeable, a fitted shape, thanks to side paneling and shoulder
ribbing that eliminates the boxy, slouchy silhouette of most
hoodies and allows for easier mobility.

"I don't expect people to know the sum of all the parts, but I
expect them to pick it up and be able to feel a difference in
quality," Winthrop says, noting that American Giant's heavyweight
hoodies retail for
a sensible $69 (the zippered version for $79), comparable to
lesser-quality shirts from brand-name retailers.

The Man Behind the Hoodie That Started the
Made-In-the-USA Apparel Movement

Here's where it gets really interesting: Winthrop guarantees that
no matter how big the company gets, its apparel will always be
made in the U.S. and will be sold at competitive prices, thanks
to the direct-to-consumer business model, which circumvents
retail markups. "I always felt that if you wanted to buy a
U.S.-made product, you had to tolerate either high prices or
shitty quality," he says.

Winthrop draws a distinction between American Giant and small
shops that sell prohibitively expensive denim, and American Giant
and the likes of American Apparel, with its dubious construction
and materials. "We are trying to solve the problem of consumer
access to quality apparel and start a revolution in domestic
manufacturing by building a scalable company," he says.

Winthrop is in his old Toyota pickup truck, headed to SFO
Apparel, where American Giant's line of men's sweatshirts, tees
and sweatpants is manufactured. He keeps up a steady stream of
banter and jocular conversation on the way to the factory site in
Brisbane, Calif., a pleasant 15-minute ride south of American
Giant headquarters in San Francisco's Mission district. He says
he chose the factory, whose other clients include sportswear
companies Under Armour and Tyr, for the can-do attitude of owner
Peter Mou and the technically skilled labor force--mostly
middle-age Chinese women working on rows upon rows of sewing
machines alongside massive boxes overflowing with knitwear in
various colors and phases of production.

It was roughly three years ago that Winthrop, a serial
entrepreneur who has headed a number of manufacturing and
consumer-products businesses (most recently bag, footwear and
apparel company Chrome Industries), became convinced there was
untapped opportunity in the made-in-the-USA apparel movement. Not
only that, but consumers--especially men--were migrating toward
online shopping at a rapid rate and beginning to spend on quality
over fast fashion. It seemed obvious to Winthrop that the
sweatshirt was a great candidate for reinvention.

"It's the ubiquitous American silhouette, and nothing in the
category stood out," he says. He left Chrome to start American
Giant, on a mission to find the right partners for the cause.

Given the sheer quantity of inventory on view at the factory,
it's difficult to imagine that the biggest problem for the
business has been meeting demand; in fact, it wasn't until May
that the company finally caught up on a massive order backlog
from December 2012, after Slate columnist Farhad Manjoo wrote a
story breaking down how American Giant had created "the greatest
hoodie ever made."

"The story went viral, and we did $600,000 in sales in 36 hours.
We sold out of everything, down to the shelves," Winthrop
recalls. "When I called our e-commerce folks the morning the
article was published, they said 75 orders had come in in the 30
seconds since I called, and it accelerated from there."
Ironically, the previous week he had been worried about
overbuying for the holiday season.

Patrick Chung, a partner at global investment firm NEA, believes
this tale is indicative of a renaissance in U.S.-based
manufacturing. "The reason fashion manufacturing went abroad was
for cost, and because we could not scale in an efficient way
inside this country," he says. "But competition has shifted
because of technology, and you have innovators who are maniacally
focused on design and want to maintain as much control as
possible to produce a product they can be proud of."

It seems Winthrop had the right idea by launching his business
with men's clothing. "Menswear is starting to develop its own
legs, and we're only in the second or third inning of where it's
going," says Hil Davis, co-founder of J.Hilburn, which has
brought custom-tailored clothing into the digital age, disrupting
retail prices with a blend of in-person style-advisor meetings
and a direct-to-consumer distribution model. In the past six
years the company has amassed more than 100,000 customers,
revenue upward of $55 million and an enviable product return rate
of only 5 percent.

Davis, however, believes that the made-in-the-USA movement has
serious limitations--particularly a puny domestic supply chain
crippled by an unskilled labor pool, at least when it comes to
custom manufacturing. "We tried to launch with a U.S. product,
but the total capacity was 7,000 shirts, and we make about 15,000
a month," he says. "There's not enough factories, workers or
equipment, so it won't work unless someone is willing to make a
massive investment … and I don't know who is going to step up."

After watching the American Giant inventory get "sucked through"
in December, Winthrop was forced to make big bets on a supply
chain that wasn't completely proven. Now he's exploring various
solutions to maximize long-term capacity. But he's confident that
a revival of domestic manufacturing is possible.

"There's a misunderstanding about the robustness of U.S.
manufacturing," he says. "People forget that our manufacturing
base is still the largest in the world from an output stance.
Those who have emerged from the gristmill are highly efficient,
nimble and innovative. What you will see in China is poor
machinery and a big investment in labor; the opposite is true in
the U.S."

For example, American Giant partners with Carolina Cotton Works
in Gaffney, S.C., a mill that exports 75 percent of its product
and is considered one of the most modern yarning facilities in
the world. Together, they deconstructed a premium yarn for the
American Giant hoodie that was previously available only from
India. "Now they produce it here, and it's cheaper. Within 100
radial miles, cotton is grown, finished, dyed and sewn," Winthrop
says.

It's easy to see why he's bullish about the future. American
Giant launched a women's line in May; the growth forecast for
2013 is 10 times greater than last year; production capacity is
20 times what it was in December; and the company is beating its
own sales projections. At press time, Winthrop was narrowing in
on a location for a new office at least triple the size of the
existing 1,000-square-foot headquarters, to provide enough room
for the team (now numbering 15) to grow. In his mind, all the
repeat customers and emotional letters and e-mails are evidence
that people have been waiting for a company like American Giant.

"When I was 8, I would wear something my mom could afford that
would last 10 years. That idea is what we stand for, and we have
a clear vision of investing in American manufacturing and
delivering through this paradigm," he says. "I feel more strongly
about it [now] than I did when I started the company."